Consumer spending nosedives in Q4

Washington – The U.S. Commerce Department reported today that “real gross domestic purchases,” a major component of the Gross Domestic Product, fell by 5.6% in the fourth quarter of 2008, compared to a 1.5% decrease in the third quarter.

The data was part of the preliminary tally of the GDP for the fourth quarter, which Commerce said decreased at a 6.2% annual rate – stunning many economists who had projected a less steep decline; some reports said this was the sharpest quarter-to-quarter fall in more than 25 years.

In related components, Commerce said Q4 “real personal consumption expenditures” fell 4.3%, following a 3.8% decrease in Q3; and imports of goods and services decreased 16.0%, following a 3.5% decrease in Q3.